The Nonprofit CEO–How Much Board-CEO Trust Is Involved?
By; Eugene Fram Free Digital Image
The title, CEO for the operating head of a nonprofit, clearly signals to the public who has the final authority in all operating matters and can speak for the organization.* .
The CEO designation calls for an unwritten trusting contact with the board based on mutual respect, drawing from the symbolism that he or she is the manager of the operating link between board and staff. It is a partnership culture. However, a solid partnership does not allow the board to vacate its fiduciary and overview obligations. The board has moral and legal obligations to “trust but verify” and to conduct a rigorous annual evaluation of outcomes and impacts CEO has generated for the organization.
While the trust the board has in its chief operating officer can’t be described in exact quantitative terms, viewing it through the lens of a set of CEO and/or Board behaviors can give an idea that a significant level of trust is involved in the relationship.
Following are some of the behaviors that signify a trusting partnership is in place:
What Role Should Nonprofit Board Members Play in Overviewing Management /Staff Talent? By: Eugene Fram Free Digital Image
Nonprofit boards rarely develop an in-depth strategy for assessing its organization’s human capital. Some will keep informal tabs on the CEO’s direct reports to prepare for the possibility of his/her sudden departure or is incapacitated. Others –smaller organizations with fewer than 20 employees—need only a basic plan for such an occurrence.
Need for Strategy: In my view, maintaining a viable talent strategy to assess staff and management personnel is a board responsibility, albeit one that is often ignored. The latter stems from the constant turnover of nonprofit board members whose median term of service is 4-6 years—hardly a lifetime commitment. Like for-profit board members whose focus is on quarterly earning results, their nonprofit counterparts are likely more interested in resolving current problems than in building sufficient bench strength for the organization’s long-term sustainability.
How Can Nonprofits Accommodate To External Influences? Some Field Observations
By Eugene Fram Free Digital Image
Ruth McCambridge, former editor of Nonprofit Quarterly, points out “Our organizational management, (board) styles and structures are affected by the four external influences.” See paraphrased bolded items below. (http://bit.ly/1HSwrZY) Following are some specific field observations I have encountered that, over several decades, support her model relating to external influences.
The nonprofit’s mission field: McCambridge points out that arts organizations have dual have leadership models—artistic and business. However, unless specified which has final authority, the system can lead to continual conflict between the two; the artistic leader wanting the most authentic productions and the business leader concerned with budget realities. The final authority is often determined by which leader has the CEO title.
Nonprofit Boardroom Elephants and the ‘Nice Guy’ Syndrome: A Complex Problem?
By: Eugene Fram Free Digital Image
At coffee a friend serving on a nonprofit board reported plans to resign from the board shortly. His complaints centered on the board’s unwillingness to take critical actions necessary to help the organization grow.
In specific, the board failed to take any action to remove a board member who wasn’t attending meetings, but he refused to resign. His three-year term had another 18 months to go, and the board had a bylaws obligation to summarily remove him from the board. However, a majority of board members decided such action would hurt the board member’s feelings. They were unwittingly accepting the “nice-guy” approach in place of taking professional action. (more…)
Identify Nonprofit Staff Groups To Help Drive Organizational Change.
By Eugene Fram Free Digital Image
Nonprofit executive directors Board Members tend to think of the staff professionals as individual contributors. These individuals are persons who mainly work on their own and but increasingly also have to contribute as team players – for instance, counselors, health care professionals, curators and university faculty. However, many executive directors fail to recognize that these individual contributors can be grouped according to identifiable types, with differing work-value outlooks. Each group needs to be motivated differently to drive change in today’s fast moving social, political and technological environments. Nonprofit board members can use these groupings in their responsibilities for overseeing promotable staff members.
Whenever the time is ripe to select a new nonprofit CEO, I think of the old joke that says “…every person looks for the perfect spouse… meanwhile, they get married.” By the same token, nonprofit board members seek perfection in a new ED/CEO– and find that they must “settle” for less. But there are certain definitive attributes that are essential to his/her success in running the organization. With the pressures of increasingly slim budgets, fund development challenges and the difficulty of recruiting high quality employees, the 21st century ED/CEO must be action oriented and come equipped with at least a modicum of the following abilities: *
Visionary: It’s all about the organization’s future. The ED/elect should bring or at least begin to cultivate a deep concept of where the nonprofit is, should be and what the trajectory should look like. He/she can do that by immersing himself in the mission field—reading widely and remaining in contact with regional and national leaders in the field. A state-of-the-art CEO should be available for consultation with colleagues with similar issues. Included in his span of vision are potential disruptions that might affect the organization– and how to help the board focus on and implement appropriate change.
Board Enabler: The new chief understands the limits of his/h operational responsibilities and the governance overview role required by the board. To build trusting relationships with the board, she/h realizes that transparency is key.
Fundraiser: The optimal fundraising relationship is a partnership between the CEO and the board. Board members must be alert to outside funding opportunities and the CEO, alert to funding opportunities from sources related to the mission field. Once an opportunity is identified, the CEO and the board work closely together to develop a proposal and to meet with the donor(s). If the organization has a development director, the person filling the position must be brought into the discussion at an early stage.
Communicator: To be organizationally successful, the Board and CEO must be in a position to interact with a variety of stakeholders: government officials, donors, vendors, clients and their surrogates, foundations, etc. One area in which many nonprofit CEOs need improvement is communications with the business community. It goes beyond simply joining the Rotary or Chamber groups. Nonprofit CEOs must have rudimentary knowledge of many businesses so they can interact intelligently with business leaders they encounter in development efforts. This information can be about specific organizations they are approaching or general knowledge acquired from perusing publications like Business Week or The Wall Street Journal.
Spokesperson: Although some suggest that the volunteer president must be the spokesperson for the nonprofit, I suggest that the Executive Director/CEO must hold this position for several reasons.
If a volunteer becomes a president/CEO, he/s may acquire some liabilities that other directors don’t have. The executive director must be the CEO. Some nonprofits have given the chief operating person the title of president/ceo and the senior board person, board chair. This eliminates confusion that often surrounds the ED title when contacting business or government officials.
The volunteer president does not work in the organization daily and does not understand its nuances as well as the CEO.
In a crisis situation, the media may contact board members. It should be clearly understood that the CEO is the only person to comment to the media.
In ceremonial situations, it may be appropriate for the president to be a spokesperson.
The CEO needs to become the “face” of the organization because volunteer presidents come and go, some annually.
Team Builder: She/h needs to build a strong management team, some of whom, over time, may become capable of becoming an Executive Director. The CEO, as head of the management team, needs to be sure all staff are performing well with some being bench strength to move to higher positions.
Tone Setter: The CEO needs to set an ethical tone where everybody feels free to express their suggestions for improving the organization. This tone, in various ways, must also be communicated to all stakeholders by the Executive Director..
Performance Monitor: Hopefully the board has a rigorous and fair system for evaluating the CEO and the organization, and the values of this system are embedded in staff evaluations.
In the best of all nonprofit worlds, every board member is an independent agent whose ability to make critical decisions on behalf of the organization is regularly uncompromised by outside pressures. This, unfortunately, is not always the case. Based on field observation I have concluded that questionable practices can plague nonprofit boards when social or political pressures are brought to bear on a board member. In governance terms nonprofit decision-makers should be “outside directors,” not overtly or covertly susceptible to management or board colleague personal pressures.
Discerning recruitment committees can screen candidates to be certain they are not subject to influences that might impair their judgment as board members. Lack of independence could easily divide and perhaps polarize the board as has happened in our country’s Congress. A candidate who is “sponsored” by a major donor and maintains personal ties with the donor can create a “hornet’s nest” for the recruitment group. There are no easy solutions to these problems.
Some typical examples of the apparent loss of independence:
• The legacy challenge. A board member is appointed to the board largely because his family has served on the board for generations, not because of his talent and/or commitment to the mission. If there are too many “legacies” on board, the optimal range of perspectives is narrowed resulting in inadequate discussion of potential actions. • The chief executive does not keep a professional social distance from the board chair and/or other board members. For example, their families are frequently engaged socially. • In “prestige boards,” a business or professional person persuades the board to accept a candidate who is business associate because he/she is a “good person” who needs board experience for networking purposes. • A candidate for a directorship has significantly caused problems on another nonprofit board, but a current active board member, a friend of the candidate, wants him to be elected so that he/she can be given a second chance.
What Can Be Done? Sometimes Nothing: But:
• Clearly acknowledge the challenges where they exist and then seek new candidates without such encumbering ties. • If possible, try to confront the situation directly, if it does not cause a schism within your board. Develop a policy, not a rule, which allows someone to open discussion if one of these issues arises. • Make independence one of the characteristics desired for board candidates and clearly acknowledge what is meant by the term. • A nonprofit board member can serve only one master—the organization’s mission. On the other hand, no nonprofit board that I have encountered is totally independent. As long as a board has enough members who are not beholden to other interests there should be no impairment in achieving the organization’s goals.
This type of subtle influence is rarely discussed, and to my knowledge, has never been researched. But, if left unattended by nonprofit recruitment committees, it can lead to political board schisms that seriously impact the organization.
Can A Nonprofit Organization Have An Operational President/CEO & An Executive Director?
By: Eugene H. Fram. Free Digital Image
Yes, if the organization has the following structure:
Board With A Volunteer Chairperson Full-time President/CEO With Full Authority for Operations Executive Director for Division A Executive Director for Division B
However this structure can be confusing to persons in the nonprofit arena. The executive director should have final authority for all operational matters related to the organization, except those designated for the board in the bylaws. For example, pensions plan changes.
The big question is who carries the CEO title. Some nonprofits, in their early stages, have a volunteer, part-time, President/CEO and an operational Executive Director. This signifies the volunteer, representing the will of the board, can have final authority in implementing board operational policies/strategies. This is not a good structure because the CEO title might lead to the volunteer having liabilities that other board members don’t have.
A Nonprofit Paradox: Weak Leadership Pool, Positive Organizational Outcomes?
By: Eugene Fram Free Digital Image
It happens: one or both of the two nonprofit engines—governance and/or management — sputters out, yet the organization continues to meet its goals and deliver adequate service to its constituents. Some examples: a child placement agency manages to maintain the quality of its oversight while struggling to deal with an admittedly inept board and CEO. Another example: An ineffective volunteer board at a youth center, meeting quarterly for a couple of hours, allows the CEO to really manage the board and to motivate the staff. The CEO realized she and the agency were in dangerous positions without an innovative board providing standard oversight, although client services were positive. (more…)
Are Nonprofit Boards Capable of Evaluating Themselves?
By: Eugene Fram Free Digital Image
A study of business boards by Stanford University yielded the following results:
Only one-third (36%) of board members surveyed believe their company does a very good job of accurately assessing the performance of individual directors.
Almost half (46%) believe their boards tolerate dissent.
Nearly three quarters of directors (74%) agree that board directors allow personal or past experiences to dominate their perspective.
And, perhaps most significant, the typical director believes that at least one fellow director should be removed from the board because the individual is not effective. *
Given that many of these business boards have the financial power to employ legal counsel or consultants to conduct a rigorous impartial evaluation, what can a nonprofit board, with limited financial resources, do to make sure that the board and its members are being fairly evaluated to drive change?
Nonprofit Management 